281 February 2018 - Gryffe Advertizer

22
the advertizer
Financial Blog
by Carl Melvin, Affluent Financial Planning Ltd
Saving Lifetime Allowance Tax by
using the “small pots” rules
The Government will tax you if they think your pension benefi ts are too
generous. This tax is based on your overall pension wealth and is known
as the Pension Lifetime Allowance or LTA. It particularly affects those with
a large fi nal salary pension and/or where your pension benefi ts exceed
£1Million (£1,030,000 from April 2018). The tax is very punitive at 55% tax
on the excess above the LTA (or 25% if you take benefi ts as income, which
is then subject to income tax).
However, there is a little-known quirk in the pension legislation that can help
you to avoid or reduce the LTA tax you pay. It’s called the “small pots”
rule and exploits the fact that small pension pots can be taken without the
value being tested against the LTA. This is not available if you have Fixed
Protection.
Let’s use an example
Mary is 60 and has a fi nal salary pension with an LTA value of £1,030,000
and a small personal pension fund of £30,000 with an insurance company.
She is therefore over the LTA and would suffer a tax charge of 55% on
the £30,000 excess amount. Using the small pots rule she could do the
following;
• Split the £30,000 into 3 small pension pots of £10,000 each
• She can draw benefi ts from the 3 small pots and avoid being tested against
the LTA
• This leaves her LTA allowance of 100% intact and when she takes her fi nal
salary benefi ts she will be within the allowance and avoid paying any LTA
tax
• By using the small pots rules, she has saved 55% of £30,000 = £16,500
saved in tax.
So, if you are close to the LTA or over it with an undrawn pension fund, you
be able to benefi t from this option.
This information is not fi nancial advice. If you require advice you should
consult a professional adviser. The fi rst meeting is normally free and there
is no obligation.
Call us for a FREE fi nancial review on 01505 59 50 60 or HYPERLINK
“mailto:info@affluentfp.co.uk”info@affluentfp.co.uk. Alternatively, pop into
the Affluent office opposite Amaretto restaurant on Main Street, Bridge of
Weir. HYPERLINK “http://www.affluentfp.co.uk”www.affluentfp.co.uk
IT Blog
with Colin Fyfe of Colcom
The recently discovered machine processor vulnerability named
Meltdown and its cousin Spectre have been in the news. Discovered
in June last year, the bugs relate to process developed back in the in
the 90’s that has remained a core function of modern computing and
data processing.
Combined these bugs affect virtually every modern computer, including
smartphones, tablets and PCs from all vendors and running almost
any operating system. Such is the disruption that these vulnerabilities
could potentially wreak that Microsoft, Apple and other software and
hardware manufacturers are doubling down on fault-fi xes and patches
to address the issue and the related ripples that will inevitably occur
as a result.
You cannot beat a good analogy, I was looking for one online relating
to this fault - that could best sum up the machine process to me. I liked
this tweet.
“You know how we finish each other’s...”
“Sandwiches?”
“No, sentences. But you guessed ‘sandwiches’ and it was in your
mind for an instant. And it was a password. And someone stole it
while it was there, fleeting.”
“Oh, that IS bad.”
(@shanselman)
These bugs underline the necessity to update your computers, whether
they be iPhones, Windows based laptops or Android mobiles. Before
long, hacker’s toolkits will contain the tools to manipulate these fl aws.
This comes at a time when updates are already giving out all sorts of
grief so remember, wherever you work; be kind to your IT department,
they didn’t ask for this!
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Business Gateway Renfrewshire can give you
practical help, advice and support for new and growing
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deadline date for our march issue - Friday 16th February - You don’t want to miss it!!
22-27 NEW BUSINESS_281 FEBRUARY18.indd 22 25/01/2018 14:50:01